A blog on eminent domain, land-use, and related matters.

Monthly Archives: May 2014

Steve Greenhut is a Southern California reporter with much experience in the field of eminent domain, so we welcome his article on an ongoing effort in California to revive redevelopment under a slightly different name. You may recall that redevelopment was abolished in California a short time ago when Governor Jerry Brown persuaded the legislature to do so, not because of his respect for private property rights, but in order to get his mitts on the millions that until then were being diverted from municipal tax revenues, and went into the pockets of redevelopers and municipal bond holders in order to create private, profit-making development projects, usually, but not always, shopping centers, car malls, etc. Brown wanted to divert that money to the State in order to plug some holes in the state budget.

Greenhut has now written an admirably concise article on this subject, relating the sneaky political efforts to revive redevelopment in California. In appears in the City Journal as Redevelopment Resurrection, City Journal (California), May 22, 2014. You can read it by clicking on http://www.city-journal.org/2014/cjc0523sg.html Do it. It’s a good read and reading it will be worth your while.

Follow up. Another article that strikes the same note and reminds us that the bad guys never sleep, see Dana Berliner, Eminent Domain Abuses Are Making a Comeback, Wall St. Jour., May 16, 2014. Dana Berliner, of the Institute for Justice and the author of this piece, was a lawyer for the property owners in the case of Kelo v. City of London (2005), so she knows whereof she speaks.

The Beloit Daily News reports the results of a taking of a 4.08-acre parcel by eminent domain for a Beloit school, as follows:

The Commissioners awarded $203,000, but on an appeal to a trial court, a jury awarded $382,000 after a three-day trial. The report provides no information as to what was the legal or factual issue that divided the parties.

Any day now a new law review article should be published. It’s entitled Detroit and the Decline of Urban America, 2013 Mich. St. L. Rev. 1547, and it was authored by your faithful servant. It deals with the causes of decline of older American cities; what caused their populations to leave en masse and move to the suburbs, leaving behind empty swaths of urban desolation (If you want to see how desolate, go to Google, type in “ruins of Detroit” and hit “enter.’ Here are some samples). You’ll get the picture — literally and figuratively. And Detroit isn’t the only one like that, even if it presents us with the worst case scenario come alive. There are others, just as bad, except that they haven’t [yet] filed for bankruptcy — Gary, Camden, Cleveland, Pittsburgh, Newark, Youngstown, Trenton, et al.

So what happened? The people who used to live in these cities did not just up and move out on a whim, did they?

In that article, we identify and take note of six factors that were instrumental in bringing about the mass abandonment of cities:

“First, there was the creation (under the GI Bill) of a large, new, college-educated middle class with all its middle-class aspirations and appetites, including a desire and the means for acquisition of middle-class suburban housing.” The post-World-War II availability of low-cost homes in the suburbs (like Levittown) was the starting gun that sent middle class urban populations to move outward.

“Second, middle-class city dwellers were motivated to leave cities to escape riots that swept cities beginning in the 1960s, and the increasingly catastrophic decline in the safety and quality of public schools—to say noth-ing of forced bussing of middle class-children to decrepit and unsafe inner city schools.

“Third, they were escaping rising urban prevalence of drugs and a rise in urban crime, notably in the 1970s.

“Fourth, they were responding rationally to the physical devastation brought about in cities by construction of federally financed highways and by urban redevelopment, which, at its peak, displaced hundreds of thousands of urban dwellers annually.”

“Fifth, they were taking advantage of generous government tax and housing policies as well as federally guaranteed mortgage loans that enabled them to buy desirable suburban homes on an unprecedented scale, thus granting them access to an agreeable lifestyle that until then was the prerogative of the well off. Feminism brought better paying jobs to women who could now pool their resources with those of their husbands, and thereby afford homes in the suburbs, that were far better than what was available in declining cities.

“Sixth, the suburban family home turned out to be a hugely successful, tax advantaged investment that provided middle class families not only with shelter, but also with unprecedented nest eggs for their old age. Even after the housing crash of 2008, the ownership of a family home continues to be viewed as a highly desirable asset as shown by the current rapid rise in the prices of family homes. To borrow Willie Sutton’s memorable phrase, “That’s where the money is.” And that is also where the middle class is, and that is where it means to stay.” 2013 Mich. St. L. Rev. at 1563-1564. And remember. most homes are not underwater; their owners, especially those who bought their homes 20-30 years ago, are still enjoying large equities that provide them, even today, with undreamed-of nest eggs for their old age. Bottom line: Those little two-bedroom, $10,000 homes of the 1950s are now selling for around $400,000. Not bad!

But not in Detroit whose population has shrunk by half since the 1950s, and where you can buy a house for $15,000 to $30,000.

You may also find interesting the 1944 statement of then Detroit Mayor Edward J. Jeffries to a congressional committee (at p. 1550), accurately predicting that laying out of freeways through cities would cause city populations to take advantage of them in order to move for the suburbs, using those freeways to commute to city jobs, but leaving cities in a state of devastation and eventually causing them to file for bankruptcy.

And finally, don’t miss the picture at p. 1560, depicting the 1950s mass move-in into new suburban homes out of cities. Thus, you could say that Uncle Sam bribed your Mom and Dad to leave cities and move to the suburbs by providing all sorts of funds and federal tax advantages, so that leaving increasingly shabby and dangerous cities and moving to the suburbs, became a no-brainer.

It’s all there, and more. So give it a shot. The article is coming out (from the printer) right now and should be in circulation presently.

Folks, If you have any interest in inverse condemnation, particularly regulatory takings, you have to take a break from whatever you are doing and read the opinion of the U.S. Court of Appeals for the 2nd Circuit, reversing the dismissal of a taking claim by a lower court. Sherman v. Town of Chester, 2d Cir., No. 13-1503-cv, filed May 16, 2014. It’s must reading for several reasons. First, for its treatment of the municipal smartasses who removed a property owner’s taking case from state court to federal court and then had the chutzpah to argue that the case must be dismissed because it should have been litigated in state court. No, we are not making this up. And second, for the court’s detailed dissection of the town’s abusive treatment of the property owner. You just gotta read it — this case goes Catch-22 one better and the court says so in plain words and in painful detail.

What is amazing is how many federal judges swallow such intellectual and moral crap whole in other cases and dismiss them, thereby denying the aggrieved property owner access to adjudication of both his state and federal constitutional claims on the merits in any court (as noted by four U.S. Supreme Court Justices in the San Remo Hotel case) .

Anyway, the opinion presents a routine scenario in which the owner who wanted to build some homes on land zoned for them was subjected to repetitive and openly abusive treatment whereby whenever he complied with what the city wanted, it asked for more or for something different. The poor guy died while this litigation was pending, so the victor in this case is his widow. You just gotta read it for yourself.

Postscript. We wanted to give you some more detail on what the court had to say in its opinion, but our colleague, Robert Thomas beat us to the punch in his blog www.inversecondemnation.com so you may as well go there for that additional information, and spare us the duplicative task of repeating it. But do go there and read Robert’s stuff and commentary. You won’t regret it.

While surfing on the net we came across an outfit that is selling books and its current pitch pushes a mystery novel entitled “Eminent Domain.” We have no idea if it’s good or not, but we plan to read it if only to get an insight into how the lay folks see eminent domain. Here it is:

Actually, it’s an audio book, so we’ll have to listen rather than read. Be warned, however. It takes over eight hours to play it. Still, if you are contemplating a long car trip, it might be just the thing.

We are reliably informed that a New York trial court (what those folks call the Supreme Court) has entered judgment in favor of the condemnee-owner as follows. Condemnor’s appraiser opined to $2,075,000, but the court rejected that opinion because of condemnor’s erroneous use of highest and best use. It argued that such use was for a gas station (current use). The court found that there was a probability of zone change that would allow the valuation of the subject property to be valued for high-rise commercial uses, so it awarded $9,186,000 (rounded).

The case is 730 Equity Corp. v. N.Y. State Urban Dev. Corp., Index No. 1689/2012, judgment entered May 7, 204. The taking was evidently a part of the Atlantic Yards project.

Word comes to us that — who else? — the 9th Circuit U.S. Court of Appeal has filed an opinion on remand, reaching the same result as before it got reversed by SCOTUS: i.e., the Agriculture Department’s demand that, in connection with the federal raisin marketing scheme Horne deliver tons of raisins to it without compensation, or pay $695,226.92 in fees and penalties, is not a taking.

The opinion concludes that the fine imposed on Horne is in the nature of an exaction, and as such valid. Really? As we understand it, an exaction may be imposed when the private, regulated activity brings about some sort of societal harm or detriment and the exaction tends to reduce of eliminate it. Our problem is that we don’t see how growing or handling raisins is a societal harm, and how paying hundreds of thousands of dollars to Uncle Sam can ameliorate that harm. In other words, if you plan to build a subdivision that will increase traffic, you can say that the developer should pay an exaction (or convey land) to rectify the resulting deteriorated traffic conditions. But how does payment of money to Uncle Sam rectify whatever harm has come to society by people being able to buy raisins at a lower price?

So how should this case have been handled? In the first round, the U.S. District Court should have transferred the case to the U.S. Court of Federal Claims, where the taking issue (and the just compensation if a taking had been found) would have been promptly and efficiently decided by now.

We are reminded of the insight of Fred Bosselman who once observed that property owners in inverse condemnation cases are denied due process of law, not by getting too little of it, but rather too much.

We assume that Horne will petition for certiorari again, but who can tell if SCOTUS will respond favorably? Its track record in that regard is like that of an autocratic King of yore, who, whilst riding through the fields on a hunting trip sees an overseer beating the crap out of a serf for no reason. His Majesty may then stop and inquire, thus providing succor to the serf, or he may ride on, being preoccupied with the royal pursuit of quail.

There hasn’t been much to report lately about California’s proposed “bullet train” between Los Angeles and San Francisco. But a dispatch in today’s Los Angele Times avers that the projected cost, has just been increased by one billion dollars.

So let’s review the bidding, as it were. First, California voters were snookered into approving at the polls the issuance of some $9 billion in bonds for that railway, because that’s what their government leaders told them this project would cost. But the first cut of the projected budget took that figure up to over 100 billion. Whereupon our Governor threw a fit, and the projected figure came down t o something like $67 billion. Now it’s up another billion.

So to paraphrase the expression of the late Illinois Senator Everett Dirksen: “A billion here, a billion there, and pretty soon you’re talking real money.”

In the meantime everything on the project is in suspended animation until the state Court of Appeal reviews the decision of a trial judge who stopped the project pending completion of this litigation.

Want to buy a home? Better be carrying lots of cash.

All-cash deals hita record 43% of home sales during the first three months of 2014, according to RealtyTrac. That’s up from 19% a year earlier and the highest level reported since RealtyTrac began tracking the deals in early 2011.

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Miami, New York, Boston and coastal California cities are attracting a lot of foreign buyers who are paying in all cash, according to Jeff Meyers, founder of Meyers Research.

In Miami, Latin Americans are putting down deposits of 50% or more on apartments in the early stages of development, enabling builders to self-finance the rest of the building or leverage bank loans at attractive rates. The buyer then pays the balance in cash at the time of occupancy.